Banking without governance: the paradox of financial performance under institutional collapse in Haiti

We investigate the paradox of financial sector growth amid institutional collapse in Haiti – one of the lowest-ranked countries in global governance indices. Despite persistent declines in the rule of law, judicial independence, and anti-corruption enforcement, Haiti’s banking sector expanded significantly between 2003 and 2023. Drawing on institutional theory and property rights theory, we analyse how deficiencies in legal infrastructure and regulatory capacity distort core elements of corporate governance. Using Varieties of Democracy (V-Dem) indicators, the study reveals that institutional fragility creates systemic risks for multinational enterprises, rendering formal governance mechanisms ineffective. Our findings highlight a process of governance substitution and institutional co-production wherein informal mechanisms compensate for formal institutional decay. This research challenges conventional agency-based models and emphasises the importance of context-sensitive strategies for firms operating in fragile states. The study contributes to business theory by advancing a nuanced framework for governance under conditions of institutional disintegration.